A ruling on holiday pay this morning could have dire consequences for East Yorkshire businesses, a Hull law firm has warned.
Only basic salary counts when calculating holiday pay at present.
However, the Employment Appeal Tribunal has now ruled overtime should also be considered in a case concerning road maintenance company Bear Scotland.
It could mean employers are liable for billions of pounds of backdated wages.
The decision is likely to be appealed, meaning changes are not expected to take effect for years.
Lee Whiting, a partner at Hull law practice Bridge McFarland, said it could leave some businesses struggling to survive if upheld.
He said: "It will mean a lot of very unhappy employers. It's going to be very expensive and without making a mountain out of a molehill there are some businesses which could go out of business."
Government estimates suggest one-sixth of the 30.8 million people in work are paid overtime.
About five million workers could be entitled to backdated pay.
The coalition and business groups had strongly argued overtime should not be included in holiday pay calculations.
A detailed decision has now been published, suggesting workers will in general be able to claim no more than one year's backdated wages.
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